Shale gas subcommittee says states regulate effectively

State regulators effectively regulate the oil and gas industry, members of a shale gas subcommittee told the US Senate Committee on Energy and Natural Resources during an Oct. 4 hearing in which senators questioned subcommittee members on the need for federal regulations on hydraulic fracturing.

Earlier this year, US Sec. of Energy Steven Chu formed the Shale Gas Subcommittee (SGS) to make recommendations regarding the safety and environmental performance of shale gas production. The subcommittee reports to the Secretary of Energy Advisory Board (SEAB).

SGS plans to issue its 180-day report to SEAB in about 6 weeks, committee members said. The upcoming report will detail what progress has been made on 20 recommendations the subcommittee made in its 90-day report released in August, said Daniel Yergin, subcommittee member and chairman of IHS Cambridge Energy Research Associates (OGJ Online, Aug. 11, 2011).

SGS’s 90-day report recommended improved communication among state and federal regulators. The report also recommended that producers disclose ingredients in hydraulic fracing fluid.

The seven-member subcommittee’s recommendations seek to protect air and water quality associated with shale gas development and production.

Public concern and debate about shale gas has grown with expanding US shale gas production. Possible pollution of drinking water from methane and chemicals used in fracturing stimulation is a key concern. Other concerns involve possible air pollution and community disruptions, such as increased truck traffic associated with shale gas exploration and production.

State vs. federal regs

“I think there is a gap in perception,” by the public regarding existing regulations by many states on oil and gas drilling and production, Yergin said. “I think there is a very strong [state regulatory] fabric.”

Producing states’ governments have long-established experience regulating the oil and gas industry, Yergin said when senators asked him how the US Environmental Protection Agency and the US Department of the Interior’s Bureau of Land Management might regulate shale plays.

“States also are much closer to the community than the federal government,” Yergin said, noting regional geology means drilling regulations, fracturing regulations, and best practices are different in Pennsylvania than in Texas.

On Oct. 3, Pennsylvania Gov. Tom Corbett outlined his proposed Marcellus shale oversight program, and many of his proposed policies stemmed from the state’s Marcellus Shale Advisory Commission report, which he received in late July.

Corbett called for increased well setbacks from private water wells and public water systems.

Stephan Holditch, chairman of Texas A&M University Petroleum Engineering Department, said the Texas Railroad Commission “does a very good job” in regulating drilling and issuing drilling permits.

“Historic oil-producing states all believe they do a good job of regulating oil and gas,” Holditch said. “I see no reason to challenge that.”

Kathleen McGinty, senior vice-president of Weston Solutions Inc., said the subcommittee recommends continuous improvement by all stakeholders, including industry and regulators, to better protect the quality of water and air.

McGinty is former chair of the White House Council on Environmental Quality under President Bill Clinton and former secretary of the Pennsylvania Department of Environmental Protection.

State regulators successfully regulate shale gas development and production, which is an industrial activity, said McGinty. “We don’t recommend that a new entity needs to do it…. We didn’t come up with any conclusion that the deck chairs need to be shuffled around.”

She noted that the state governments of Wyoming and Colorado have made “significant progress” in protecting air quality associated with exploration, drilling, and production efforts.

Mark Zoback, Stanford University geophysics professor, said the subcommittee identified actions to reassure the public regarding the safety of shale development, particularly the safety of chemical used in fracing fluids.

The subcommittee was not authorized to say what level government should regulate shale development, Zoback said. He noted that fracing receives the most public attention, yet leaks and spills come from well blowouts or from breached wastewater containment areas rather than from frac jobs.

“There are significant environmental impacts to shale development, but none of them have anything to do with hydraulic fracturing,” Zoback said.

Implement best practices

The subcommittee recommended creation of a shale gas industry production organization dedicated to continuous improvement of best practices. It also recommended the federal government provide financial support for unconventional research and development efforts.

Specifically, the subcommittee said two organizations can help improve the availability of shale gas information for the general public.

These organizations are the existing not-for-profit State Review of Oil and Natural Gas Environmental Regulation, known as STRONGER, and the Ground Water Protection Council (GWPC).

STRONGER is set up to provide peer review of state regulatory activities. The peer reviews are conducted by a panel of state regulators, industry representatives, and environmental organization representatives with respect to the processes and policies of the state under review.

The US Department of Energy, EPA, and the American Petroleum Institute have supported STRONGER, the subcommittee’s 90-day report said.

GWPC has a project to expand a risk-based data management system, which allows states to exchange information about fracing operations.